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Rebate cards produce winners and losers
 The
first consideration for rebate credit cards is the spending habits
of the cardholder. Is the credit card used for a multitude of everyday
expenses, or just for occasional indulgences? Is the cardholder
a businessperson or owner of a business that would be using the
card for substantial charges? The level of spending determines the
level of benefits earned.
Also evaluate any annual fee on the card. A low-volume
consumer is best to avoid a card with an annual fee as these fees
may diminish, or offset entirely, the meager benefits earned. However,
the larger volume consumers may find that the annual fee is overwhelmed
by the benefits earned on the card.
Rebate cards offer more than just frequent flier miles
and cash. Other options include free gasoline, gift certificates
for merchandise at particular retailers or for general online use,
and even discounts on your next automobile.
Which reward gives you the most bang for the buck?
For low volume users that don't travel extensively, the air miles
may not be tremendously enticing, but the idea of cash back or a
free fill-up at the pump could provide some lift to a sagging budget.
Those that do travel extensively may find the additional
frequent flier miles earned on a rebate card are the difference
between being cramped in coach or flying in the splendor of first
class, where passengers reportedly get their very own bags of peanuts.
Finally, many cardholders have gotten creative with
their cards in order to rack up the rewards. Cardholders have used
their cards to invest in savings bonds or to buy money orders that
are then used for paying the mortgage or the paperboy, or anyone
else that does not normally accept credit cards. The key to getting
creative is to do so without overspending. Think about how you can
transform regular monthly expenditures into something that provides
a repeated reward.
A cardholder that pays the balance in full every month
but is looking for some type of reward is a candidate for a rebate
credit card. For a list of rebate credit cards, check out the Bankrate.com
search engine.
Greg McBride is a financial analyst
for Bankrate.com.
For advice regarding your specific
situation, please e-mail one of Bankrate.com's
Q&A experts or visit the Personal
Finance Advice channel on Bankrate.com.
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